3 November 2017

Divorce in the UK – An international perspective

As the world becomes ever smaller with more and more people living international lifestyles, couples who have multiple nationalities or live in more than one country may have a choice of where to issue divorce proceedings. The varying approaches different countries take to how assets are shared on divorce mean that choosing the right country to issue proceedings can be crucial if you are considering a divorce. As it stands (although this may well change come Brexit) in the case of EU countries, the first person to issue divorce proceedings will get to choose the jurisdiction. This can mean a dramatically different divorce settlement depending on who issues first. In non EU countries the English Courts will look at a wider range of factors before deciding which Jurisdiction should take precedent.

The English Courts are known for providing generous divorce settlements to the more financially disadvantaged spouse. Ensuring you have the right to issue proceedings in England and Wales can therefore be of fundamental importance. For non-nationals to gain the right to issue divorce proceedings in England and Wales you have to prove that you have been habitually resident in England and Wales for 1 year prior to issuing divorce proceedings. It may be possible to prove this even if you spend time in more than one country during this period.

So what happens if the divorce does proceed in England in respect to financial settlement. Firstly the English Courts do not apply a separate property approach. All foreign, non-English based resources and assets must be disclosed whether held in joint or sole names. In contrast to many other countries the English Courts will make orders against foreign-based assets. This includes foreign based real property, bank accounts and investments, trusts, pensions and corporate interests. The disclosure must be full and frank and is wide ranging. If a spouse has a beneficial interest in any asset held in the name of somebody else then it must be disclosed. The court will make findings about who really owns the asset and order the person in whose name the asset is held to give specific disclosure.

Assets held in off shore trusts including having an interest as a discretionary beneficiary, must be disclosed. The Court will want to know the likelihood of future payments being made to the beneficiary, looking at the past history of payments to all the beneficiaries. Assets and resources held in companies even if the shareholdings are held by other companies or corporate entities must be disclosed. The English Court’s will also not shy away from making orders against trusts if they deem the trust to be “nuptial settlements”.

The English Court’s principal objective is to ensure a fair settlement with the starting point being an equal division of all the assets built up during the marriage, regardless of how and by whom they are held. This is very different to some other jurisdictions. On top of that English Courts have made generous provision for spousal maintenance going forward for the more financially disadvantaged party.

How do you protect yourself from what could potentially be a hefty divorce settlement all because of where you decide to spend your time as a family when all was well within the relationship? Whilst unromantic prenuptial and postnuptial agreements are a practical way of saving couples from the emotional and financial cost of protracted proceedings when the marriage fails. This is especially the case when a number of countries could have jurisdiction to hear the divorce proceedings. Prenuptial agreements are akin to insurance policies – there in case disaster strikes, but usually kept undisturbed in the bottom drawer. The law in England recognise both pre-nuptial and post-nuptial agreements as decisive factors in assessing how assets are divided on divorce, providing they are well drafted and do not put the financially weaker party in a position of real need. They can also deal with in which jurisdictions proceedings should be issued on divorce. If circumstances have changed during the marriage, such as the receipt of inheritance then you can enter into a post-nuptial agreement; these arguably have more weight, because not signing such an agreement does not carry with it the threat of a cancelled wedding. Post-nuptial agreements are available to anyone who feels that it is of benefit to be clear what will happen on divorce, regardless of the length of the marriage.

In summary careful consideration and appropriate specialist advice is needed if you are concerned about the impact relocating your family to England may have in the event of a divorce and what options are available to you to try and mitigate any such risk.